Major Efforts of International Banking
Base Rate System
- Base Rate System introduced in banking sector by the RBI with effect 1st July, 2010.
- Base Rate System will replace Benchmark Prime Lending Rate (BPLR) introduced in 2013.
- Base Rate System introduced on the recommendation of Deepak Mohanty Committee aims at enhancing transparency in lending rate of banks and enabling better transmission of monetary policy.
Basel Norms:
Basel norms are set by Bank of International Settlement (BIS) in Basel, Switzerland. 55 countries Central Bank's are members to the BIS.
Basel II Norms:
It is guide to capital adequacy standards for lenders. The aim of Basel II is to better align the minimum capital required by Regulators with risk.
Basel III Norms:
- It will become operational from 1st January, 2013 in a phased manner.
- Banks to increase their core tier-one capital ratio to 4.5%.
- Provision for a counter-cyclical capital conservation buffer of 2.5% by 2019.
- The total CRAR required Basel III is proposed at 10.5%.
Rules for Basel III :
Reserve Bank of India released its guidelines on Basel III capital regulation on 2nd May, 2012.
Guidelines for Basel III :
- Indian bank have to maintain. Tier-I capital or core capital at least 7% of their risk weighted assets or ongoing basis.
- The total capital ratio including tier-I and tier-II must be at least 9%.
- For tousle year ending 31st March, 2013 bank will have to disclose capital ratio computed under existing guidelines.
